Otago soars to top of economic scoreboard

Nick Tuffley.
Nick Tuffley.
Otago has soared to the top of the ASB Regional Economic Scoreboard, moving up five places in the three months ended September.

And with the top spot comes the obligatory five-star rating. Five stars means "steaming", four stars "simmering", three stars "needs an energy boost" and two stars "in the doldrums".

ASB chief economist Nick Tuffley said yesterday  the region’s tourist hot spots of Queenstown and Wanaka would benefit from more holiday accommodation as the "no vacancy" signs had been up for much of the year.

Annual growth in guest nights had slowed to  6%, paltry by recent standards.

"Indeed, the region is bursting at the seams, spurring a construction boom for the ages. Total construction is up 70% annually."

All the activity had translated into Otago having one of the tightest labour markets in the country and unemployment had dipped to 3.7%.

House prices were still charging ahead, lifting 21% in the past year, Mr Tuffley said.

However, annual growth in house sales had slowed to 8% in the September quarter from 45% in June. It seemed the new investor housing restrictions were also having an impact in Otago.

"All up, the summer of 2016-17 is shaping as one to remember in Otago. However, we caution it may pay not to overindulge, particularly when it comes to housing."

Otago’s immediate neighbours Southland and Canterbury did not fare well in the September quarter.

Southland dropped six places to second to last in the quarter rankings, just ahead of Canterbury which sat at last place and its star rating downgraded to three.

Mr Tuffley said activity levels in Canterbury remained high, particularly in terms of construction, but signs of economic rebalancing were being seen.

The unemployment rate was lifting towards 4% and closer to the nationwide average.

"Moreover, the Canterbury rate is no longer the lowest in the country. We expect these trends will continue to play out over the remainder of the year and into 2017."

The  boost to dairy income in rural Canterbury would off-set  the overall trend some-what, Mr Tuffley said.

Southland’s ranking had dropped to two stars. Southland’s retail and construction sectors were lagging behind the rest of the country. With the turnaround in dairy prices, the region was likely to receive a "shot in the arm" during the remainder of the year and into 2017.

Excellent growing conditions recently were likely to boost confidence in the broader agriculture sector in the quarters ahead, Mr Tuffley said.

This week, the Government announced it was pouring  nearly $2.5million into Southland to lift the economy through the development of tourism, aquaculture, international students and primary industries.

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